TIDMTECH
RNS Number : 7338B
TechFinancials Inc.
06 April 2017
6 April 2017
TechFinancials Inc.
("TechFinancials", the "Company", or the "Group")
Preliminary Results for the year ended 31 December 2016
TechFinancials Inc. (AIM: TECH), a leading technology provider
to financial trading brokers, today announces its results for the
year ended 31 December 2016.
The Company also announces that in accordance with AIM Rule 20,
electronic copies of its Annual Report and Accounts for the year
ended 31 December 2016 are available from the Company's investor
relations website at https://group.techfinancials.com/. Hard copies
of the 2016 Annual Report and Accounts will be posted to
shareholders on Wednesday 12(th) April.
Financial Highlights
-- Revenue increased by 57% to US$21.3 million (2015: US$13.6 million)
-- Core software licensing revenue increased by 22% to US$10.4 million (2015: US$8.6 million)
-- Trading platform revenues increased by 117% to US$10.9 million (2015: US$5.0 million)
-- Revenue from DragonFinancials of UD$9.3 million; net profit
of US$5.6 million - Company holds a 51% stake in
DragonFinancials
-- Net cash generated from operating activities increased to
US$5.9 million (2015: US$0.1 million)
-- Gross margins increased to 78% (2015: 71%)
-- Operating profit increased to US$5.0 million (2015: operating loss US$0.1 million)
-- EBITDA attributable to shareholders was US$2.8 million (2015: US$0.6 million)
-- Pre-tax profit attributable to shareholders was US$1.3
million (2015: pre-tax loss of US$0.4 million)
-- Strong cash position of US$7.7 million as at 31 December 2016 (2015: US$3.4 million)
-- Basic earnings per share ('EPS') have increased to a profit
of US$ 1.72 cents in 2016 from a loss of US$ 0.73 cents in 2015
-- DragonFinancials, the Company's 51% subsidiary, paid an
interim dividend of US$2.0 million in November 2016 and an
additional final dividend of US$3.0 million was paid in March
2017
-- Additional consideration of US$1.54 million payable in shares
to owners of Optionfortune (non-controlling interest holders of
TechFinancials) based on DragonFinancials' results for 2016 -
contingent consideration of US$4.53 million payable on results for
2017
Operational Highlights
Software Licensing (B2B)
-- B2B software licensing division continued its strong
performance with significant revenue growth
-- Launch of an add-on Contract For Difference ("CFD") trading
platform in the second half of 2016
-- Continued international expansion - major push into the Asia
Pacific region opening Chinese office to expand B2B services to
China
-- R&D focused on solutions for Asian markets and on
development of products to meet regulatory changes.
-- Strengthened R&D team in Ukraine
Trading Platform (B2C)
-- Returned to profitability in the B2C division through the
successful integration and operation of DragonFinancials, a new B2C
trading platform focused on the Asia Pacific Region
Asaf Lahav, Group Chief Executive Officer of TechFinancials,
commented:
"The Group enjoyed a good year in which we have seen
profitability restored as a result of the decisions we took as a
Board to diversify our product offering and focus on high growth
markets such as Asia.
"However, going forwards we expect 2017 will be challenging due
to the loss of our largest customer and the uncertain and
tightening regulatory environment particularly in Europe. We
anticipate these regulatory changes will have an impact on the B2B
performance for the rest of 2017, both on its revenues and on
earnings.
"Our focus in 2017 will be on mitigating the loss of our largest
customer and adapting to the tougher regulatory environment by
diversifying our product offering with the introduction of Forex
and CFD online trading solutions and with plans to introduce
further products in coming years. We will also build on the success
achieved by our B2C offering and focus on Asia.
"We do feel that ultimately the regulatory changes will
strengthen the industry and that there will be clarity by the end
of 2017, and once that occurs, with a strong balance sheet, we will
be well positioned to serve the market from 2018 onwards."
For further information:
TechFinancials, Inc.
Asaf Lahav, Group Chief Executive
Officer
Yuval Tovias, Chief Financial www.group.techfinancials.com
Officer
Jeremy Lange, Chief Operations
Officer / Investor Relations
Grant Thornton UK LLP (Nominated
Adviser)
Colin Aaronson / Samantha Harrison Tel: +44 (0) 20
/ Carolyn Sansom 7383 5100
Northland Capital Partners Limited
(Broker)
Patrick Claridge / David Hignell Tel: +44 (0) 20
/ John Howes 3861 6625
Peterhouse Corporate Finance
(Joint Broker)
Lucy Williams / Eran Zucker Tel: +44 (0) 20
7469 0932
Yellow Jersey PR Limited (Media Tel: +44 (0)
Relations) 7825 916 715
Felicity Winkles / Alistair de
Kare-Silver
About TechFinancials
TechFinancials plc (AIM: TECH) is a leading innovator and
supplier of financial trading solutions for retail clients. The
Group operates a B2B division licensing white label software
solutions to online brokers. In addition, the Company operates a
B2C division operating trading platforms worldwide and
incorporating a strategic joint venture focusing on solutions for
traders in the Asia Pacific region.
Further information can be found at
http://techfinancials.com.
Chairman's Statement
I am delighted to report that we achieved record revenues and
profitability in 2016. Overall, revenues have increased by 57% and
profits attributable to shareholders were US$1.2 million against a
loss of US$0.5 million in 2015. EBITDA attributable to shareholders
grew from US$0.6 million in 2015 to US$2.8 million in 2016.
During the year, we successfully implemented many of our
international expansion plans which have transformed our business
and financial performance. Our strategy has been focused on the
high growth markets in Asia where we successfully integrated our
investment in DragonFinancials.
DragonFinancials is a partnership with the owners of
Optionfortune Trade Limited to operate our B2C trading platform
focused on the Asia Pacific region and the partnership has exceeded
our expectations in its first year of operation. As a result,
contingent consideration is payable as outlined in Note 8. The
performance of DragonFinancials has restored the B2C division to
profitability and generated excellent cash flows for the Group.
Our B2B software licensing business has continued to grow its
revenues although EBITDA has declined as the Company has invested
in building for the long-term. The simplified Forex platform and
mobile and tablet trading solutions have continued to support
growth across the business. In the second half of the year, we
launched the CFD platform, our third trading platform, which
expands our offering to spot traders.
An analysis of the financial performance of each segment of the
Group's business is provided in Note 9 to the financial
statements.
The improvement in the Group's financial performance has
benefitted our cash flows and at the year-end our cash balances
stood at US$7.7 million. These positive cash flows have supported a
continued, and indeed enhanced, programme of R&D expenditure
which, the Board believes, should support future revenue and growth
opportunities.
We have completed our trading solution to comply with
regulations in the Japanese market. At this stage the marketing of
this product has been delayed until the Company decides whether to
allocate resources to the Japanese market based on its prospects
compared to alternative markets. Much of the R&D and technology
development work is being applied to meet the European regulations
likely to be adopted by CySEC and the FCA.
In the US, we had hoped to complete our trading solution to
comply with US regulations in 2016. This has been delayed due to
continuous discussions and work with Cantor Exchange around the
business model that should apply to this market; however, like our
Japanese project much of our development work is being applied to
meet the European regulations likely to be adopted by CySEC and the
FCA. This along with the Japanese trading solution developed should
create further revenue opportunities toward the end of 2017 or at
the beginning of 2018.
Regulation
The regulatory environment surrounding the marketing of binary
options, forex and CFD trading in a number of countries is
tightening and remains uncertain. Regulators in Europe have
published consultation papers and until the conclusions are
published the uncertainty will remain. It is also likely that
regulatory changes will have an impact on our product
offerings.
We expect this uncertainty will continue to be a challenge for
the industry as a whole in 2017. As a Company we seek to operate to
the highest regulatory standards and we will continue to work with
the regulators and respond to consultation papers accordingly. As
clarity is provided on various consultation papers we will update
the market as appropriate.
In light of this we will continue in 2017 as we did in 2016 to
take steps to mitigate the impact of these regulatory changes on
our business. We have focused heavily on building and enhancing our
technologies to the highest levels of compliance and diversifying
and developing our product offering with Forex and CFD online
trading solutions with plans to introduce further products in the
coming years such as fixed strike options. We have enlarged our
R&D team in Ukraine to support the ongoing adjustments to
products as regulation tightens and to enhance the growth of the
Asian markets through solutions that are relevant to this
region.
Margins
We have once again been able to improve margins through control
of expenditure and by efficiently controlling the cost of customer
acquisitions. I am pleased to say that the improvement seen in the
first half of the year continued in the second half of 2016. Our
investment in new technologies has been an important element in
improving our customers' user experience as well as enhancing
operational efficiencies. The launch of the CFD platform should
also have a beneficial impact on future margins.
Business summary and operational review
B2B
I am pleased to report that our core software licensing business
enjoyed further strong growth this year, with revenues increasing
by 22% to US$10.5 million, and revenues on a standalone basis
increased by 27% to US$11.5 million. The simplified forex platform
and mobile and tablet trading solutions which were introduced in
2015 have both performed strongly in 2016 and the launch of the
add-on CFD platform in the second half of 2016 should contribute to
revenues in 2017. Our focus on the Asian markets has proved to be a
fruitful one and helped to drive higher revenues.
Our increasingly diversified product offering and geographic
spread have helped us to continue to grow our customer base. The
regulatory environment however, remains uncertain and challenging
and we will need to be innovative and proactive in order to respond
to these changes and to maintain our momentum and competitive edge.
We have continued to invest in our R&D team and a programme of
new products. Our R&D expenditure increased by 46% to US$3.3
million in 2016.
We have also increased our investment in selling and marketing
activity and staff levels to support long term-growth. In the short
term, these increased levels of expenditure have impacted the
profitability of the B2B division, with EBITDA attributed to
shareholders on a standalone basis falling from US$2.4 million in
2015 to US$1.3 million in 2016.
Whilst we have made progress on completing our US and Japanese
compliant trading solutions, we have delayed their launch. The
development work is instead being applied to our European
operations in order for us to move quickly to adapt to changes
likely to be adopted by CySEC and the FCA. We believe this will
bring further growth opportunities.
B2C
The B2C business has been transformed by the establishment of
DragonFinancials, a partnership with the owners of Optionfortune, a
B2C binary options trading platform focused on the Asia Pacific
region, which began operating in January 2016.
Overall, revenues have increased by 117% to US$10.9 million.
This includes revenues of US$9.3 million from DragonFinancials
which commenced its trading platform activity in January 2016.
Following a loss in 2015, the business has been transformed by the
establishment of DragonFinancials. With increased operational
efficiencies and careful control of overheads, the division
achieved positive EBITDA attributed to shareholders of US1.5
million against negative EBITDA attributed to shareholders of
US$1.8 million in 2015.
Under the terms of the agreement with the owners of
Optionfortune, an additional consideration payment of US$1.54
million is payable in shares in respect of the results of
DragonFinancials in 2016. A total of 3,868,615 Techfinancials
shares were placed in escrow pending finalisation of the financial
results of DragonFinancials and were transferred to the owners of
Optionfortune on 22 March 2017.
In addition, as part of the agreed contingent consideration
arrangements, Techfinancials will make an additional payment of
US$4.528 million, at its option, in either cash or shares
calculated at a minimum of 27p per share, provided that
DragonFinancials' net profit in the calendar year 2017 is at least
US$4.176 million, representing 90% of the Eligible Profit achieved
in 2016. The Company has therefore recognised a contingent
consideration payable of US$4.528 million (see Note 8). Goodwill of
US$5.0 million has been recognised as a non-current asset in
relation to these arrangements.
In February 2016, we entered into an agreement with IBID, a
company specialising in developing high growth online solutions. We
established a new company, IBID Financials Ltd. ("the Partner"),
focused on the European regulated markets. Our aim was to integrate
Techfinancials' trading platform into the Partner's online
marketing systems. However, in July 2016, the contract was
cancelled as a result of breaches of the agreement by the
Partner.
The Board does however remain committed to the European
regulated markets and is continuously seeking alternative solutions
to develop this market.
Dividends
The Board and Management's policy is to pay a progressive
dividend. However, in light of the near term challenges as a result
of the regulatory headwinds the Board will not be recommending a
final dividend for FY2016. The Board's intention is to resume
dividend payments when it is prudent to do so.
Outlook and current trading
The Group enjoyed a good year in which we have seen
profitability restored as a result of the decisions we took as a
Board to diversify our product offering and focus on high growth
markets such as Asia. This could not have been achieved without the
skill, passion and hard work of all of our staff. On behalf of the
Board, I would like to thank them for their efforts during the
year.
In February 2017, the Company received a notice of termination
from its largest software licensee Richfield Capital, owner of
www.24option.com ("Richfield"), to its current agreement with the
Group with effect from 1 April 2017. While Richfield migrated most
of its trading activity to its in-house system, as of the report
date Richfield Capital continues trading activities in low volumes
using the Company's product. The Company has agreed with Richfield
effective 1 April 2017, the terms of a new license agreement that
will support this decreased level of trading that Richfield
performs on the Company's system.
Performance during the first quarter of 2017 is in line with
management expectations. However, 2017 will be challenging due to
the loss of the Group's largest customer and the uncertain and
tightening regulatory environment particularly in Europe, which has
already caused some of the Company's licensees to halt their
operations. We anticipate business owners may choose to postpone
additional or new investments until the results of regulatory
consultations are published and clarity is restored. The Company
believes that regulatory changes may also occur in the Asian
market. We anticipate these changes will have an impact on the B2B
performance for the rest of 2017, both on its revenues and on
earnings.
Our focus in 2017 will be on mitigating the loss of our largest
customer and adapting to the tougher regulatory environment by
diversifying our product offering with the introduction of Forex
and CFD online trading solutions and with plans to introduce
further products in coming years. As a result of these product
changes, we have become a provider of diversified online trading
solutions rather than a binary options business. We will also build
on the success achieved by our B2C offering and focus on Asia.
The Company's balance sheet is strong with US$7.7 million of
cash as at 31 December 2016, and this allows us to plan for the
long-term.
We do feel that ultimately the regulatory changes will
strengthen the industry and that there will be clarity by the end
of 2017, and once that occurs we will be well positioned to serve
the market from 2018 onwards.
We remain committed to creating value for shareholders and I
would like to thank our shareholders for their continued
support.
We look forward to updating the market on our progress in due
course.
Christopher Bell
Independent Non-Executive Chairman
6 April 2017
Strategic Report
Financial Results
The Group generated revenues of US$21.3 million in the year
ended 31 December 2016, (2015: US$13.6 million), a 57% increase
from the prior year. The increase in revenues has led to a
turnaround in results with the Group recording an operating profit
of US$5.0 million (2015: operating loss of US$0.1 million). EBITDA
attributable to shareholders has grown from US$0.6 million in 2015
to US$2.8 million in 2016.
The Group has continued to grow its core software licensing
revenues which have increased from US$8.6 million to US$10.5
million in 2016, an increase of 22% on the previous year (on a
standalone basis revenues have increased from US$9.1 million to
US$11.5 million in 2016, a growth rate of 27%).
B2B revenue growth has been driven mainly by an increase in
revenues from existing customers rather than an increase in the
number of active brands using Techfinancials' platform.
Revenues from the Company's B2C division have also grown, from
US$5.0 million in 2015 to US$10.9 million in 2016, an increase of
117%, reversing the decline in 2015. This growth has been achieved
through the successful integration of DragonFinancials, which runs
our B2C trading platform in the Asia Pacific region.
DragonFinancials started operations in January 2016 and produced
revenue of US$9.3 million in its first year. The successful
integration of DragonFinancials, coupled with improved operational
and marketing efficiencies in Asia have transformed the financial
performance of the division. This success means that additional
contingent consideration is payable as outlined in Note 8.
Margins have also increased, reflecting the operational and
marketing efficiencies implemented in 2016. The improvement in
gross margins seen in the interim results has continued. Overall,
the Group achieved a full year gross margin of 78%, up from 71% in
2015. B2C margins have responded positively to the focus on the
Asia Pacific region where operating costs are lower than in Europe.
Margins on a standalone basis have increased from 59.3% in 2015 to
75.3% in 2016. B2B margins on a standalone basis have improved from
73.0% to 73.4%.
Overall, pro tability has benefitted from the increased level of
revenues and margins and a semi-variable overhead cost structure
which has seen overheads grow less quickly than revenues. In
particular, whilst selling and marketing costs have remained stable
at US$4.2 million, R&D expenditure increased by 47% to US$3.3
million, reflecting a continued focus on product innovation,
regulation and improving customer experience. The Company
successfully launched its CFD trading platform in the second half
of 2016.
The amount of R&D expenditure capitalised was US$0.3 million
compared with US$0.8 million in 2015. Further development
expenditure was incurred on the CFD project and on trading
solutions for the Asian markets. Further details are provided in
Note 3 to the Financial Statements.
Administration costs increased by 27% to US$4.1 million which
reflects performance related bonuses to staff and management,
additional overheads to support the Group's geographical expansion
and an increase in bad debts from US$332,000 to US$541,000.
The Group recognised a finance charge of US$558,000 in respect
of the contingent consideration payable to the owners of
Optionfortune as more fully described in Note 8.
Notwithstanding these increases in expenditure, the combination
of increased revenues and enhanced margins has had a significant
impact on the bottom line. The result before tax has improved from
a pre-tax loss of US$0.4 million in 2015 to a pre-tax profit of
US$4.1 million in 2016.
The increase in B2C trading platform revenues have resulted in
positive EBITDA attributed to shareholders for the division of
US$1.5 million on a standalone basis compared with a loss of US$1.8
million on standalone basis in 2015. The lower costs of operating
in Asia have also contributed to improvement in profitability.
B2B licence income on a standalone basis has produced US$1.3
million of EBITDA attributed to shareholders compared with US$2.4
million in 2015. Increased R&D expenditure to support future
growth, as well as higher selling, marketing and administration
costs have offset the growth in revenues.
Detailed information on the financial performance of each
segment is provided in Note 9 to the financial statements.
There is a tax expense of US$136,000 in 2016 (2015: US$100,000).
A majority of the Group's profits have not been taxable as the
profits generated by DragonFinancials are sourced from the
Seychelles and are not subject to tax. In Israel, the Group is
taxable at a rate of 25.0% of assessable pro ts (2015: 26.5%) while
in Cyprus the statutory rate of tax is 12.5%. Further details are
provided in Note 6.
Basic earnings per share ('EPS') have increased from a loss of
US$ 0.73 cents in 2015 to a profit of US$ 1.72 cents in 2016. On a
diluted basis, EPS increased from a loss of US$ 0.73 cents in 2015
to a profit of US$ 1.70 cents.
The Group generated net cash from operating activities of US$5.9
million compared with US$0.1 million in 2015. This level of cash
generation has allowed the Group to continue its investment in new
products and services and regulatory infrastructure; cash out ows
from investing activities was US$0.5 million (2015: US$1.3
million).
The Group has continued to place great importance on strong
controls over working capital and the collection of cash from
operators. Debtor days at the end of 2016 were 28 days compared
with 27 days at the end of 2015.
Cash out ows from nancing activities were US$1.1 million
compared with an inflow of US$3.1 million in 2015 when the Company
received proceeds from its admission to AIM.
The Group's cash balances at the end of 2016 totalled US$7.7
million (2014: US$3.4 million).
Operations
The Group has benefitted from its R&D activities of recent
years and its strategic focus on Asia during the past year. The
investment in DragonFinancials has transformed the B2C online
trading platform and whilst the regulatory environment continues to
tighten, the Group is well placed to meet these challenges.
We have launched our CFD trading platform and and are developing
online trading solutions for the Asian markets. Our Asian focus
will continue as we see considerable growth opportunities in the
region.
Whilst our agreement with IBID Financials was not successfully
concluded, we continue to explore alternative solutions to the
European regulated markets.
We have delayed the completion of our trading solution to comply
with US regulations and the marketing of the trading solution to
comply with Japanese regulations, but the development work on these
solutions should enable us to meet increased regulations in Europe
where further changes are anticipated from CySEC and the FCA.
As previously noted, the Company's largest software licensee
will terminate its current agreement with the Group with effect
from 1 April 2017. This will have a negative impact on financial
performance of the B2B segment but the Board has actively planned
for this loss and its strategic focus on new revenue sources should
serve to mitigate the shortfall.
Techfinancials will continue to develop new products and invest
in its highly experienced R&D team. The regulatory and
competitive environment is evolving quickly and the Board will seek
to maximise the opportunities that come from these changes. Our
cash reserves and strong balance sheet mean that we are well placed
to capture growth from new products and markets.
The Directors have continued to build infrastructure to support
the Group's long-term growth plans whilst keeping day-to-day
overhead costs under control.
Key Performance Indicators
The Board monitors key performance indicators ('KPIs') on a
monthly basis. The Board considers that the most important ones for
the success of the business are:
-- Numbers of licensees using the Group's software: 34 (2015:
56). Whilst the number of brands has fallen due to the tightened
regulations around the world, revenues per brand have grown and
resulted in a 26% increase in licence revenues.
-- Total number of trades executed through its licensees: 20.98 million (2015: 16.96 million).
-- Total revenues: US$21.3 million (2015: US$13.6 million)
-- EBITDA attributed to shareholders: US$2.8 million (2015: US$0.6 million)
-- Cash generation from operating activities: US$5.9 million (2015: US$0.078 million)
The Company's systems track trading volumes on a daily basis.
These statistics provide an early and reliable indicator of current
performance of the trading platform. Pro tability of the business,
with its relatively low xed cost base, is managed primarily via a
review of revenue and margins. Working capital is reviewed by
measures of absolute amounts and debtor days.
Growth Strategy and Outlook
The Group's near term goals are to seek partners for its B2C
division for expansion in Europe, diversify our product offering
and build on the success achieved by our B2C o ering in Asia. The
Company believes that this strategy can successfully mitigate the
effects of the loss of its largest B2B customer. We have
successfully integrated DragonFinancials and will continue our
focus on the high growth potential of Asian markets.
We will continue to launch new trading platforms and other
products to meet the changing demands of our global customer base.
We will continue to target markets with high growth potential and
develop solutions for newly regulated jurisdictions.
Investment in our brand is vital and our marketing activities
will seek to strengthen further the Company's brand awareness. As
the regulatory landscape continues to change, we have been
diversifying our product offering with Forex and CFD online trading
solutions with plans to introduce further products in coming years.
As a result, we have become a provider of diversified online
trading solutions rather than a binary options business.
The anticipated changes coming from the European regulators have
created an uncertainty in the market, leading business owners to
postpone additional or new investments until the new regulatory
requirements are published and, as a result, will result in lower
short term demand for the Company's products in the EU territory.
However, the Company believes that this situation will be resolved
towards the end of the year, and is in process of making changes to
its product line, so as to be well positioned to serve the market
towards 2018.
We have achieved a significant improvement in financial
performance in 2016 and are working on alternative solutions to
meet the challenges that lie ahead in 2017. Regulatory challenges
abound and whilst 2017 is likely to prove to be a challenging year,
we believe that in the longer term the tightening of regulatory
procedures governing financial trading will prove to be an
opportunity to the Company.
We remain con dent about the long-term prospects of the Group
and continue to invest for the future and adapt to the evolving
regulatory environment.
Asaf Lahav
Chief Executive Officer
6 April 2017
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2016
2016 2015
--------- -----------------------------
Note US$'000 US$'000
Revenue 21,325 13,575
Cost of sales (4,675) (3,983)
--------- -----------------------------
Gross profit 16,650 9,592
Other income 2 -
Research and development (3,336) (2,276)
Selling and marketing
expenses (4,202) (4,247)
Administrative expenses (4,077) (3,214)
--------- -----------------------------
Operating profit/(loss) 5,037 (145)
Bank fee (141) (66)
Foreign exchange loss (285) (151)
Finance cost of contingent (558) -
consideration
Other financials expenses (2) (14)
--------- -----------------------------
Financing expenses (986) (231)
Profit/ (loss) before
taxation 4,051 (376)
Income tax expense 6 (136) (100)
--------- -----------------------------
Profit/(loss) after
taxation 3,915 (476)
Other comprehensive - -
income
Total comprehensive
income 3,915 (476)
========= =============================
Profit/ (loss) attributeable
to:
Owners of the Company 1,179 (476)
Non-controlling interest 8 2,736 -
--------- -----------------------------
Profit (loss) for the
period 3,915 (476)
Earnings per share
attributable to owners
of the parent during
the year:
Basic (Cents USD) 7 1.72 (0. 73)
========= =============================
Diluted (Cents USD) 7 1.70 (0. 73)
========= =============================
Consolidated Statement of financial position
As at 31 December 2016
31 December 31 December
============================== ===== ------------- -------------
2016 2015
============================== ===== ------------- -------------
Note US$'000 US$'000
============================== ===== ============= =============
Non-current assets
============================== ===== ============= =============
Intangible assets 3 7,843 2,821
============================== ===== ============= =============
Property and equipment 510 471
============================== ===== ============= =============
Other long term assets 42 -
============================== ===== ------------- -------------
8,395 3,292
============================== ===== ------------- -------------
Current assets
============================== ===== ============= =============
Trade and other receivables 2,121 1,627
============================== ===== ============= =============
Restricted bank deposits 279 203
============================== ===== ============= =============
Cash and bank balances 7,651 3,391
============================== ===== ------------- -------------
10,051 5,221
============================== ===== ------------- -------------
Total Assets 18,446 8,513
============================== ===== ============= =============
Current liabilities
============================== ===== ============= =============
Trade and other payables 4,546 1,474
============================== ===== ============= =============
Income tax payable 138 142
============================== ===== ------------- -------------
4,684 1,616
============================== ===== ============= =============
Non-current liabilities
============================== ===== ============= =============
Contingent consideration 4,058 -
============================== ===== ============= =============
Due to shareholders
(non--trade) - 281
============================== ===== ------------- -------------
4,058 281
============================== ===== ============= =============
Share capital 4 55 36
============================== ===== ============= =============
Share premium account 7,500 5,979
============================== ===== ============= =============
Treasury shares (1,540) -
============================== ===== ============= =============
Share-based payment
reserve 5 925 877
============================== ===== ============= =============
Accumulated profits
/ (losses) 1,008 (276)
============================== ===== ------------- -------------
Equity attributable
to owners of the Company 7,948 6,616
============================== ===== ============= =============
Non-controlling interests 1,756 -
============================== ===== ============= =============
Total equity 9,704 6,616
============================== ===== ============= =============
Total Equity and Liabilities 18,446 8,513
============================== ===== ============= =============
Consolidated statements of changes in equity
For the year ended 31 December 2016
Accumulated
profits/
Non
-controlling
Share (losses) interests-
Share
Share based
capital- Treasury payment
(Note Premium-(Note Shares-(Note reserve-(Note (Note (Note
4) 4) 4) 5) 4) Total 8) Total
--------- --------------- ------------- -------------- ------------ -------- ------------- ---------
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
--------- --------------- ------------- -------------- ------------ -------- ------------- ---------
Balance
at 1 January
2015 28 2,753 - 557 372 3,710 - 3,710
--------- --------------- ------------- -------------- ------------ -------- ------------- ---------
Total
comprehensive
income
for the
year - - - - (476) (476) - (476)
Dividends
to owners - - - - (172) (172) - (172)
Share
based
payment - - - 320 - 320 - 320
Issue
of shares 8 3,226 - - - 3,234 - 3,234
--------------- ------------- -------------- ------------ -------- ------------- ---------
Balance
at 31
December
2015 36 5,979 - 877 (276) 6,616 - 6,616
========= =============== ============= ============== ============ ======== ============= =========
Total
comprehensive
income
for the
year - - - - 1,179 1,179 2,736 3,915
Dividends
to owners - - - - - - (980) (980)
Share
based
payment - - - 153 - 153 - 153
Transfer
of Share
based
payment
reserve
on lapsed
options - - - (105) 105 - - -
Issue
of shares 19 1,521 - - - 1,540 - 1,540
Treasury
shares - - (1,540) - - (1,540) - (1,540)
Balance
at 31
December
2016 55 7,500 (1,540) 925 1,008 7,948 1,756 9,704
========= =============== ============= ============== ============ ======== ============= =========
Consolidated statements of cash flows
For the year ended 31 December 2016
The consolidated statements of cash flows for the Group for the
years ended 31 December 2015 and consolidated for the year ended 31
December 2016 are set out below:
Years ended 31 December
--------------------------
2016 2015
------------ ------------
US$'000 US$'000
------------ ------------
Cash Flows from operating
activities
(Loss)/ Profit before tax
for the period 4,051 (376)
Adjustment for:
Profit on disposal of property
and equipment 3 2
Amortization of intangible
assets 3 352 330
Depreciation of property
and equipment 100 70
Share option charge 4 153 320
Operating cash flows before
movements in working capital
(Increase)/decrease in
trade and other receivables (494) (214)
(Increase) in long term
receivables (42) -
(Decrease)/ increase in
trade and other payables 1,799 (42)
Interest Expenses 2 -
Income tax paid - (12)
------------ ------------
Net cash generated/ (used)
from operating activities 5,924 78
------------ ------------
Cash flows from investing
activities
Proceeds from disposal
of property, plant and
equipment 10 15
Increase of restricted
bank deposits (76) (163)
Development of intangible
assets 3.1 (334) (833)
Acquisition of property,
plant and equipment (146) (344)
------------ ------------
Net cash used in investing
activities (546) (1,325)
------------ ------------
Cash flows from financing
activities
Interest Paid (2) -
Dividends paid (980) (172)
Repayment of borrowings (92) -
Investment in Equity - 3,226
------------ ------------
Net cash generated/(used)
in financing activities (1,074) 3,054
------------ ------------
Net increase/ (decrease)
in cash and cash equivalents 4,304 1,807
Cash and equivalents at
beginning of period 3,391 1,663
Effect of changes in exchange
rates on Cash (44) (79)
------------ ------------
Cash and equivalents at
end of period 7,651 3,391
============ ============
NOTES TO THE FINANCIAL STATEMENTS
1. General Information
Techfinancials Inc (the "Company") and its subsidiaries
(together, the "Group") is engaged in the development and licensing
of financials trading platforms to businesses and the provision of
investment services through its trading platform. The Financial
Statements present the consolidated results of the Group for each
of the years ended 31 December 2016 and 2015.
The Group
Techfinancials Inc. (formerly Mika Holdings Inc.), a company
incorporated in the British Virgin Islands on 16 June 2009 as a
British Virgin Island company under the BVI Business Companies Act,
2004, is the holding company for the Group. The Company is listed
on AIM. The Financial Statements of the Group includes the
Financial Statements of B.O. TradeFinancials Limited a Cyprus
Investment Firm ("CIF") in accordance with license no. 216/13
granted by the Cyprus Securities and Exchange Commission ("CySEC")
on 27 September 2013, MarketFinancials Limited a company regulated
by the Financial Services Authority in Seychelles under the license
SD006 issued on 21 October 2014, Techfinancials (Israel) 2014 Ltd,
an Israeli incorporated company, DragonFinancials Limited a company
incorporated on 27 October 2015 in Seychelles owned 51% by
Techfinancials, Techfinancials Asia a dormant company incorporated
in Hong Kong and Slidepoint Trading Limited, a dormant company
incorporated in Cyprus. The companies within the Group are set out
below, all of which are private companies limited by shares.
County of
Registered registration percentage
office or incorporation of ownership Principal activity
--------------------- ------------------ -------------- ---------------------
Techfinancials, British Development and
Inc. Virgin Islands licensing of
financial trading
platforms.
B.O. TradeFinancials Cyprus 100% The provision
Limited. of investment
services, being
the operation
of the OptionFair
trading platform.
Techfinancials Israel 100% The provision
(Israel) 2014 of services to
Ltd. the Group from
November 2014
MarketFinancials Seychelles 100% Liquidity provider
Ltd. since January
2015. Providing
Binary Option
and Forex market
maker services
and risk management
to the Group
DragonFinancials Seychelles 51% The provision
Ltd. of marketing
services, being
the operation
of the Option33
trading platform
from January
2016.
Slidpoint Cyprus 100% Dormant
Trading Ltd
Techfinancials Hong Kong 100% Dormant
Asia
Capital Financials Vanuatu 100% Dormant
Ltd
The registered offices for the companies within the Group are as
follows:
Techfinancials, Inc.: Craigmuir Chambers, PO Box 71, Road
Town,
VG1110 Tortola, British Virgin Islands.
B.O.TradeFinancials Limited: 1, Kosta Hadjikakou, Kyriakos Tower, 1st Floor
4107, Agios Athanasios, Limassol, Cyprus.
Techfinancials (2014) Israel Ltd: 3 Hamada St. Herzliya, Israel.
DragonFinancials Ltd: Francis Rachel St. Victoria, Mahe,
Seychelles
MarketFinancials Ltd: Suite 3, Global Village, Jivan's Complex,
Mont Fleuri,
Mahe, Seychelles
Slidepoint Trading Ltd.: 6 Tassou Papadopoulou, office/flat 22,
2373 Ag.
Dometios, Nicosia, Cyprus
Techfinancials Asia Ltd.: Room 506A5/F, Tower 1, Admiralty
Centre, 18
Harcourt Road, Hong Kong
Capital Financials Ltd.; S.I.P Building, Rue Pasteur, Port Vila,
Vanuatu
2. Summary of significant accounting policies
Basis of preparation
The consolidated Financial Statements have been prepared in
accordance with International Financial Reporting Standards as
adopted by the European Union ("IFRS") issued by the International
Accounting Standards Board ("IASB") including related
interpretations issued by the International Financial Reporting
Interpretations Committee ("IFRIC"). The consolidated Financial
Statements have been prepared under the historical cost convention,
as modified by the revaluation of financials assets and liabilities
at fair value through the profit and loss.
The individual Financial Statements of each Group entity is
measured and presented in the currency of the primary economic
environment in which the entity operates (its functional currency).
The consolidated financial statements are presented in US Dollars,
which is the presentational currency for the financial statements,
and all values are rounded to the nearest thousand ($000).
The preparation of Financial Statements in conformity with IFRS
require the use of certain critical accounting estimation. It also
requires management to exercise its judgment in the process of
applying the Group's accounting policies.
Basis of consolidated reporting
The financial statements of the subsidiaries are prepared for
the same reporting year as the parent Company using consistent
accounting policies. Control is achieved where the Group is
exposed, or has rights, to variable returns from its involvement
with the investee entity and has the ability to
affect these returns through its power over the investee.
Control is lost when the Group no longer has rights to variable
returns from its involvement with an investee entity and no longer
has the ability to affect those returns as it no longer has power
over the investee. When control is lost the subsidiaries are
de-recognised and no longer consolidated.
The results of subsidiaries acquired or disposed of during the
year are included in the Consolidated Statement of Comprehensive
Income from the effective date of acquisition or up to the
effective date of disposal, as appropriate.
The Group uses the acquisition method of accounting to account
for business combinations. The consideration transferred for the
acquisition of a subsidiary is the fair values of the assets
transferred, the liabilities incurred and the equity interests
issued by the Group. The consideration transferred includes the
fair value of any asset or liability resulting from a contingent
consideration agreement. Acquisition related costs are expensed as
incurred. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date. On
an acquisition by acquisition basis, the Group recognises any
non-controlling interest in the acquiree either at fair value or at
the non-controlling interest's proportionate share of the
acquiree's net assets.
The excess of the consideration transferred, the amount of any
non-controlling interest in the acquiree and the acquisition date
fair value of any previous equity interest in the acquiree over the
fair value of the Group's share of the identifiable net assets
acquired is recorded as goodwill. If this is less than the fair
value of the net assets of the subsidiary acquired in the case of a
bargain purchase, the difference is recognised directly in the
Consolidated Statement of Comprehensive Income.
Investments in subsidiaries are accounted for at cost less
impairment. Acquisition related costs are expressed as incurred.
Cost is adjusted to reflect changes in consideration arising from
contingent consideration amendments.
Inter-company transactions, balances and unrealised gains on
transactions between Group companies are eliminated. Unrealised
losses are also eliminated. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with the
policies adopted by the Group.
3. Intangible assets
Year ended 31 December
------------------------
2016 2015
----------- -----------
US$'000 US$'000
----------- -----------
Computer software 5 5
Development expenditure recognized
as intangible assets 2,798 2,816
Goodwill* 5,040 -
----------- -----------
7,843 2,821
=========== ===========
* The amount of goodwill is remeasured and does not correspond
to the figures in 2016 interim statements since adjustments to the
final valuation of acquisition of DragonFinancials were made, as
detailed in Note 8.
3.1 Intangible assets - development expenditure and computer software
Project Computer
A Project B Project C Project D Project E Software Total
------- --------- --------- ------------------ ---------- --------- -------
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
------- --------- --------- ------------------ ---------- --------- -------
As at 31
December
2015
Cost
At 1 January
2015 784 858 673 - - 4 2,319
Additions - - 259 359 211 4 833
------- --------- --------- ------------------ ---------- --------- -------
At 31 December
2015 784 858 932 359 211 8 3,152
------- --------- --------- ------------------ ---------- --------- -------
Accumulated
amortisation
At 1 January
2015 - - - - - 1 1
Charge for
the year 157 171 - - - 2 330
------- --------- --------- ------------------ ---------- --------- -------
At 31 December
2015 157 171 - - - 3 331
------- --------- --------- ------------------ ---------- --------- -------
Net book
value
At 31 December
2015 627 687 932 359 211 5 2,821
======= ========= ========= ================== ========== ========= =======
As at 31
December
2016
Cost
At 1 January
2016 784 858 932 359 211 8 3,152
Additions - - 82 87 162 3 334
------- --------- --------- ------------------ ---------- --------- -------
At 31 December
2016 784 858 1,014 466 373 11 3,486
------- --------- --------- ------------------ ---------- --------- -------
Accumulated
amortisation
At 1 January
2016 157 171 - - - 3 331
Charge for
the year 157 171 - - 21 3 352
------- --------- --------- ------------------ ---------- --------- -------
At 31 December
2016 314 342 - - 21 6 683
------- --------- --------- ------------------ ---------- --------- -------
Net book
value
At 31 December
2016 470 516 1,014 446 352 5 2,803
======= ========= ========= ================== ========== ========= =======
Project A - Forex trading solution.
Project B - Mobile and tablet native applications adjusted to
different screen sizes.
Project C - Trading solution for the US market.
Project D - Trading solution for the Japanese market.
Project E - Trading solution for CFD.
Current estimates of useful economic live of intangible assets
are as follows:
Development expenditure recognized as intangible assets 5 years
Goodwill N/A
Computer software 3 years
-------
The intangible assets are reviewed for impairment annually and
whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable, the recoverable
amount of intangible assets is determined based on a value in use
calculation using cash flows forecasts derived from the most recent
financial model information available.
The recoverable amounts of all the above have been determined
from value in use calculations based on cash flows projections from
formally approved budgets covering a five year period to 31
December 2020. The key assumptions used in these calculations
include discount rates and turnover projections. Management
estimates the discount rates using pre-tax rates that reflect
current market assessments of the time value of money and risks
specific to expected future projects.
Major assumptions are as follows:
2016
--------------------------------------------------------------
Project Project Project Project Project Computer
A B C D E software
--------- --------- -------- -------- -------- ----------
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
--------- --------- -------- -------- -------- ----------
Discount
rate - - 15% 15% 15% N/A
IRR - - 42% 57% 85% N/A
A 25% increase in the discount rate would result in no
impairment charge.
During 2016 the Company covered all its expenses recognised as
intangible assets for projects A and B.
3.2 Intangible assets - Goodwill arose on the acquisition of DragonFinancials Ltd.
This assessment of goodwill was done by comparing the gross
profit to the value of goodwill for the entity whose acquisition
gave rise to the goodwill. (see also Note 8)
Goodwill
Discount rate on future
cash flows 40%
4. Share capital
As at 31 December
-----------------------------------
2016 2015
---------------- ----------------
Number of Number of
Authorised Shares Shares
---------------- ----------------
The Company Ordinary share
of US$0.0005 100,000,000 100,000,000
---------------- ----------------
Authorised 100,000,000 100,000,000
================ ================
As at 31 December
---------------------------------
2016 2015
---------------------- --------
Issued and fully paid US$'000 US$'000
---------------------- --------
The Company Ordinary share
of US$0.0005 55 36
====================== ========
Ordinary shares issued and fully paid
US$'000
----------------
At 1 January 2016 36
Treasury shared issued 19
share based compensation exercise
of options -*
----------------
At 31 December 2016 55
================
*less than a thousand
Share Capital -Amount subscribed for share at nominal value.
Share Premium -Amount subscribed for share capital in exercise
of nominal value.
Share-based payment reserve-The share-based payments reserve is
used to recognise the value of equity-settled share-based payments
provided to employees, including key management personnel, as part
of their remuneration. Refer to Note 5 for further details of these
plans.
Treasury Shares-On 8 June 2016, in accordance with the agreement
with the owners of Optionfortune Trade Limited, the Company issued
and allotted 3,868,615 Ordinary Shares (Treasury Shares) in
certificated form in the name of Capita Trust Company Limited A/c
25379, being US$ 1.54 million at 27 pence, which are held in escrow
pending the determination of the 2016 results.
5. Share-based payment transactions (Group)
During the years ended 31 December 2013 and 31 December 2014,
the Group introduced two share-based payment arrangements ("2013
Plan") and ("2014 plan") which are summarised below.
Employee Stock Option Plan:
Year ended 31 December
2015
--------------------------------------
Weighted Average
Numbers of Exercise Price
Option (US$)
--------------- ---------------------
Balance at beginning
of period 3,714,000 0.01
Granted 2,357,440 0.3080
Lapsed during the period (4,175,160) 0.0645
--------------- ---------------------
Balance at end of period 1,896,280 0.0440
=============== =====================
Year ended 31 December
2016
--------------------------------------
Weighted Average
Numbers of Exercise Price
Option (US$)
--------------- ---------------------
Balance at beginning
of period 1,896,280 0.0440
Granted 569,800 0.189
Lapsed during the period (407 ,020) 0.211
--------------- ---------------------
Balance at end of period 2,059,060 0.151
=============== =====================
Type Share Option Plan on behalf of certain senior employees of
the Group
Date of Grant: 8 June 2016 (2014 Plan)
Number Granted: 569,800 options to purchase ordinary shares of US$0.0005 each.
Contractual life: 10 years
Vesting conditions: 330,441 on the first year of grant, 101,010
option a year after the date of grant,
87,628 after two years and 50,721 on the fourth year.
Earliest Exercise date: 8 June 2016
Exercise price: US$0.189
The model inputs for the 2016 grant were:
* share prices at grant date US$0.189
* weighted average exercise prices of US$ 0.189;
* expected volatility of 55 per cent;
* contractual life of 10 years; and
* a risk-free interest rate of 4.5 per cent.
On 8 June 2016 the Company granted 569,800 options respectively,
to purchase ordinary shares of the company to 35 employees under a
new share-based plan adopted by the board of Directors in November
2014. The options vesting dates ranges from the date of grant and
up to 4 years, and are exercisable for a period of 10 years with an
exercise price of $0.189 per share.
On 11 November 2016, a former employee of the Company exercised
79,845 options pursuant to the 2014 employee share option plan, to
acquire 45,329 ordinary shares of US$0.0005 ("Ordinary Shares") in
the Company in consideration for the cancellation of the balance of
34,516 options.
This estimated fair value was calculated by applying a
Black-Scholes option pricing model. In the absence of a liquid
market for the share capital of the group the expected volatility
of its share price is difficult to calculate. Therefore the
Directors have considered the expected volatility used by listed
entities in similar operating environments to calculate the
expected volatility.
The expense and equity reserve arising from share based payment
transactions recognised in the Year ended 31 December 2015 and 2016
was US$320,000 and US$153,000 respectively.
6. Income tax expenses
Years ended 31 December
-------------------------
2016 2015
------------ -----------
US$'000 US$'000
------------ -----------
Current income tax 136 100
136 100
============ ===========
A reconciliation of income tax expense applicable to the profit
before taxation at the statutory tax rate to the income tax
expense/(release) at the effective tax rate of the Group is as
follows:
Years ended 31 December
--------------------------
2016 2015
------------ ------------
US$'000 US$'000
------------ ------------
Profit (Loss) before taxation
and exceptional loss on group
reorganisation. 3,915 (476)
============ ============
Profit multiplied by standard
rate of EIT of 0% - -
Effect of:
Different tax rates in different
countries 136 100
Israeli tax rates 2015-2016:
26.5% -25%
Cyprus tax rates 2015-2016:
12.5%.
------------ ------------
136 100
============ ============
7. Earnings per share
The calculation of earnings per share is based on the following
earnings and number of shares:
Years ended 31 December
--------------------------
2016 2015
------------ ------------
US$'000 US$'000
------------ ------------
Profit/(loss) attributable to
equity holders 1,179 (476)
============ ============
Weighted average number of shares
basic* 68,634,680 65,494,411
Earnings/(loss) per share basic 0.0172 (0.0073)
Weighted average number of
shares diluted 69,334,680 65,494,411
=============
Earnings/(loss) per
share diluted 0.0170 (0.0073)
*Including treasury shares held in escrow (see Note 4).
The difference between basic and diluted earnings per share is
due to shared based compensation transaction. (see Note 5)
8. Business acquisition
On 20 October 2015, the Company entered into an agreement with
the owners of Optionfortune Trade Limited, a company registered in
Hong Kong ("Optionfortune owners") to operate a B2C binary options
trading platform focused on the Asia Pacific region.
Under the terms of the agreement a new business entity,
DragonFinancials Ltd, was incorporated, and is owned 51% by
Techfinancials and 49% by Optionfortune owners.
On 1 January 2016 (the closing date) DragonFinancials started
its trading platform activity.
Under the terms of the agreement on 22 March 2017, an amount of
3,868,615 Techfinancials shares, worth US$1.54 million, previously
held in escrow, were transferred to the owners of
Optionfortune.
Furthermore Techfinancials will make an additional payment, at
its option, in either shares or cash worth of US$4.528 million,
provided that DragonFinancials' net profit in the calendar year
2017 will be at least US$4.176 million, representing 90% of the net
profit Eligible Profit achieved in 2016.
The estimates of the fair value of the assets acquired based on
management assumptions:
Fair value of consideration: US$5.040 million
Acquired:
Assets:
Account receivable $0.2 million
Liabilities:
Trade payable ($0.2 million)
-------------------------
Net Assets acquired US$NIL
-------------------------
Goodwill US$5.040 million
The Contingent consideration from this agreement amounts to
US$5.040 million consisting of:
Period ended
31 December
2016
US$'000
Current liabilities - Value of
consideration due to Optionfortune
owners as a result of DragonFinancials
milestone achievement in the calendar
year 2016. 1,540
Long term liabilities- Assuming
that profits in 2017 are at least
90% of the Eligible Profit of
US$4.640 million in 2016. Long
term liability represents the
amount of US$4.528 million discounted
at 6% over a period of one year. 4,058
Total Contingent liabilities* US$5.598 million
* The difference of US$0.558 million between the contingent
consideration and the contingent liabilities represents the PV as
of 1 January 2016 discounted at 6% over a period of one year.
9. Segment Information
Business segment
IFRS 8 requires operation segments to be identified at the basis
of internal report about component of the Group that are regularly
reviewed by the Chief Financial Officer ("CFO"), and by the board.
For this purpose's the Group's primary format for reporting segment
information is business segments, with each segment representing a
product category.
Geographical information has not been disclosed as it is not
available and the cost to develop it would be excessive.
The segment information provided to management for the
reportable segments for the year ended 31 December 2015 and 31
December 2016 is as follows:
Year ended 31 December 2015
B2C B2B Services
Trading Licence between segments
platform income Total
---------- --------- ------------------ --------
US$'000 US$'000 US$'000 US$'000
---------- --------- ------------------ --------
Revenue and result:
----------
Revenues from external
customers 5,006 9,070 (501) 13,575
Cost of sales 2,036 2,448 (501) 3,983
Gross profit 2,970 6,622 - 9,592
Research and development - 2,276 - 2,276
Selling and marketing
expenses 3,096 1,151 - 4,247
Administrative expenses 1,756 1,458 - 3,214
Finance expenses 115 116 - 231
Profit before tax
from recurring activities (1,997) 1,621 (376)
EBITDA* (1,843) 2,418 - 575
EBITDA attributed
to shareholders (1,843) 2,418 - 575
Assets and liabilities
Assets 1,539 6,974 - 8,513
Liabilities 1,111 786 - 1,897
---------- --------- ------------------ --------
Depreciation and additions
Depreciation 35 35 - 70
Additions to property,
plant and equipment 109 235 - 344
---------- --------- ------------------ --------
* Earnings before interest, tax, depreciation and amortisation
and non-cash charges
Revenues from the Group's top three customers in 2015 represent
approximately 34.6% of the total revenues. Most of the 34.6% is
consisting of one customer.
Year ended 31 December 2016
B2C B2B Services Acquisition
Trading Licence between related cost
platform income segments ** Total
---------- --------- ---------- -------------- --------
US$'000 US$'000 US$'000 US$'000 US$'000
---------- --------- ---------- -------------- --------
Revenue and result:
Revenues from external
customers 10,870 11,527 (1,072) - 21,325
Cost of sales 2,685 3,062 (1,072) - 4,675
Gross profit 8,185 8,465 - - 16,650
Other (income)
expenses - (2) - - (2)
Research and development 192 3,144 - - 3,336
Selling and marketing
expenses 2,350 1,852 - - 4,202
Administrative
expenses 1,358 2,719 - - 4,077
Finance expenses 169 259 - 558 986
Profit before tax
from recurring
activities 4,116 493 - (558) 4,051
EBITDA* 4,329 1,313 - - 5,642
EBITDA attributed
to shareholders 1,523 1,313 - - 2,836
Assets and liabilities
Assets 10,144 8,302 - - 18,446
Liabilities 296 2,611 - 5,697 8,604
---------- --------- ---------- -------------- --------
Depreciation and
additions
Depreciation 31 69 - - 100
Additions to property,
plant and equipment - 146 - - 146
---------- --------- ---------- -------------- --------
* Earnings before interest, tax, depreciation and amortisation
and non-cash charges
** see Note 8
Revenues from the Group's top three customers in 2016 represent
approximately 30.21% of the total revenues.
10. Contingencies
The Company's Israeli subsidiary has recently undergone a tax
audit for the year 2014-2016. No provision in relation to this
matter has been recognised in the Financials Statements based on
legal advice which indicates that it is not probable, at this
stage, that a significant liability will arise.
11. Subsequent events
In February 2017, the Company received a notice of termination
from its largest software licensee Richfield Capital, owner of
www.24option.com ("Richfield"), to its current agreement with the
Group with effect from 1 April 2017.
The Company has agreed with Richfield effective 1 April 2017,
the terms of a new license agreement that will support this
decreased level of trading that Richfield performs on the Company's
system.
On 1 March 2017 the board of directors of DragonFinancials, the
Company's 51% subsidiary, recommended the payment of a dividend of
US$3.000.000, payable within 15 days from the approval. The Company
received 51% of that amount.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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